You’ll Need Home Insurance Before Your Purchase Even Closes
One of the next most important steps now, is to obtain Home Insurance for your new investment. If you’re getting a mortgage, your lawyer will need to forward proof of insurance to the mortgage company before they will release the funds.
Home Insurance is Confusing
In this article, home insurance refers to coverage that protects your property and/or it’s contents, in case of fire, water damage, theft, etc. If this is your first purchase, your head might be swimming with the different insurances you’ve heard about. Home insurance is different from:
- Mortgage Loan Insurance – If you put less than 20% down on your new home, you need to purchase this coverage through CMHC, Genworth, or Canada Guarantee. This premium is rolled into your mortgage payment
- MPP Insurance – If you’re borrowing money to purchase your home, your mortgage broker will ask you if you want to purchase Mortgage Protection Insurance. This will protect you in the case of illness, job loss, or other circumstances that affect your ability to pay your mortgage. It’s optional, but you should have your own life/critical illness insurance if you’re turning it down.
- Title Insurance – You purchase Title Insurance through your lawyer. It protects you against mortgage fraud and issues that may affect the title or ownership of your property.
Now That We’ve Got That Straight
Prices vary, so shop around for the best coverage and value. Don’t just settle for the most familiar name. Before you make calls, gather as much information as you can about the home and property you are planning to insure. That way, you’ll be able to answer questions accurately, when speaking to an insurance sales rep.
Here are Some Questions Your Insurance Company Might Ask:
- How old is your home?
- How far is your home from the closest fire department?
- If in town, how far away is the nearest hydrant?
- What type of roofing material do you have and approximately how old is it?
- What type of water supply pipes do you have?
- What type of waste plumbing pipes do you have?
- What type of electrical wiring do you have?
- How old is the wiring?
- What size of electrical panel do you have (example: 60/100/200 amp)?
- If your panel is less than 100 amp, it can be hard to get coverage.
- Are there any known structural or environmental issues with the home?
- Has there been any known water damage due to flooding or leakage (example: roof or basement)?
- Are there any outstanding work orders, building permits, bylaw infractions or anything you feel the insurance company should know about?
Be 100 percent up front when getting a quote, if there is anything unusual about your property. You want to make sure you are covered if you ever need to make a claim.
Keep Your Home Insurance Provider in the Loop
Inform your insurance provider, if you do any improvements to the home or property. For example, let them know if you install:
- A new wood stove
- A pool (above or inground)
- A garage or deck
- Renovate a kitchen or bathroom
- Add an addition or an in-law suite
- Finish the basement
This isn’t an exhaustive list. Just remember that keeping your insurance company up-to-date about the condition of your home will ensure your coverage is valid, should you ever need it.
Getting insurance can be confusing and you may not know the answers or understand the questions they have for you. Feel free to contact me, with no obligation. I would be happy to help in any way I can.